Musician Keko smoking

As government finalises preparations for the 2018/19 budget, the Economic Policy Research Centre (EPRC) in its policy brief ‘Using taxation to control tobacco consumption in Uganda’ has urged that government puts 70 percent tax on the retail price of cigarettes, which could make it costly venture for more youth.

“Although the percentage of tobacco use has reduced over the past five years from 10.5 per cent in 2012/13 to 5.4 per cent in 2016/17 (UNHS), smoking prevalence among the youth has remained higher than the national rate,” says the brief in part.

The EPRC brief cites the Uganda Global Youth Tobacco Survey Report (2008) that found that up to 15.6 per cent of the students had ever smoked cigarettes while the national rate from the 2009/10 UNHS was 8.5 per cent. “This is a worrying trend because reducing the numbers of new smokers is one of the key tenements of tobacco control,” EPRC adds.

The policy brief explores the possibility of higher taxes on tobacco as effective policy instruments for reducing smoking among the most vulnerable groups like youth in Uganda. The major recommendation in this brief is that excise duty should make up to 70 per cent of the retail price of cigarettes.

Despite signing and ratifying the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) in June 2007 Uganda, the EPRC says, has not levied the WHO-recommended 70 per cent on retail price for cigarettes.

“The existing taxes are still below the WHO recommended thresholds whereby tobacco excise taxes should make up to 70 per cent of the retail price,” the policy analysts say, adding that excise taxes in Uganda currently make up 31 per cent of the retail price for regular cigarettes.

The policy brief, quoting sources, says that tobacco use is a major risk factor for non-communicable diseases like heart disease as well as lung and related cancers and that tobacco taxation has been found to greatly influence cigarette prices, thereby influence consumption.

“Increases in tobacco excise taxes have been shown to be the most effective policy instrument for reducing smoking in other developing countries like Uganda which are still in the infancy of the tobacco use epidemic, even though consumption among vulnerable groups such as the youth is on the rise and that it requires evidence to inform and drive tobacco control policies.

Results from the 2013 Global Adult Tobacco Survey for Uganda showed that tobacco products are low priced in comparison to other basic household items. Research also shows that in 2016 an average tobacco user in Uganda spent up to Shs949,000 (US$ 365) annually on cigarettes.

EPRC argues that taxation as a tool for tobacco control is underpinned by two competing objectives for governments. The first is to optimise revenue by imposing higher taxes and the second is to use the higher prices borne out of those higher taxes as a deterrent to suppress consumption and reduce the resultant negative externalities.

“To achieve both these objectives, excise tax changes must take into account GDP growth and inflation. Failure to do so affects real revenue for the first objective, and makes tobacco products more affordable thereby undermining the second objective,” it says.

EPRC argues that beyond pegging the tax changes to inflation, there is a need to unify the tiers in the tax structure and remove preferential tax rates for domestically produced cigarettes.” In addition new focus must also be directed at other tobacco products whose consumption is likely to increase in the face of less affordable cigarettes,” it says.

 

 

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